Supplement No. 15 published with Gazette No. 24 of 21st November, TRUSTS LAW. (2011 Revision)

Transcription

1 Supplement No. 15 published with Gazette No. 24 of 21st November, TRUSTS LAW (2011 Revision) Law 6 of 1967 consolidated with Laws 39 of 1967, 10 of 1971, 27 of 1977 (part), 8 of 1979 (part), 18 of 1986, 23 of 1991 (part), 7 of 1995 (part), 5 of 1998, 20 of 2006, 9 of 2008 and 8 of 2011 and with the Trustees Law (Cap. 175), the Trustees (Charitable Purposes) Vesting Law (Cap. 176), the Trusts (Foreign Element) Law, 1987 (17 of 1987) as amended by Law 6 of 1995 and the Special Trusts (Alternative Regime) Law, 1997 (18 of 1997). Revised under the authority of the Law Revision Law (1999 Revision). Originally enacted- Law 6 of th January, 1967 Law 39 of th November, 1967 Law 10 of rd March, 1971 Law 27 of th December, 1977 Law 8 of th April, 1979 Law 18 of th November, 1986 Law 23 of th December, 1991 Law 7 of st June, 1995 Law 5 of th March, 1998 Law 20 of st July, 2006 Cap st January, 1964 Cap st January 1964 Law 17 of th April, 1987 Law 6 of st June, 1995 Law 18 of rd September, 1997 Law 9 of th June, 2008 Law 8 of st February, Consolidated and revised this 31st day of July, Note (not forming part of the Law): This revision replaces the 2009 Revision which should now be discarded.

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3 TRUSTS LAW (2011 Revision) ARRANGEMENT OF SECTIONS 1. Short title 2. Definitions PART I - Introductory PART II - Appointment and Discharge of Trustees 3. Limitation on the number of trustees 4. Power of appointing new or additional trustees 5. Power to appoint trustees of property belonging to infants or to persons out of the Islands 6. Supplemental provisions as to appointment of trustees 7. Evidence as to a vacancy in a trust 8. Retirement of trustee without a new appointment 9. Vesting of trust property in new or continuing trustees 10. Power of Court to appoint new trustees 11. Power to authorise remuneration 12. Powers of new trustee appointed by the Court PART III - Presumption of Lifetime Effect and Reserved Powers 13. Presumption of immediate effect 14. Reserved powers 15. Indemnity of trustees PART IV - Administration of Trusts General Powers of Trustees 16. Power of trustees for sale to sell by auction or private contract 17. Power to postpone sale 18. Trust for sale of mortgaged property where right of redemption is barred 19. Power to sell subject to depreciatory conditions 20. Power of trustees to give receipts 21. Power to compound liabilities 22. Power to raise money by sale, mortgage or otherwise 23. Protection to purchasers and mortgagees dealing with trustees 24. Devolution of power of trustees 25. Power to insure 3

4 26. Application of insurance money where policy kept up under any trust, power or obligation 27. Deposit of documents for safe custody 27A. Accounts and records 28. Reversionary interests, valuations and audit 29. Power to employ agents 30. Power to concur with others 31. Distribution of assets after notice by executor or administrator Powers of Maintenance and Advancement, and Protective Trusts 32. Power to apply income for maintenance and to accumulate surplus income during a minority 33. Power of advancement 34. Protective trusts Investment of Trust Funds 35. Authorised investments 36. Investment in bearer securities 37. Discretion of trustees 38. Power to retain investment which has ceased to be authorised 39. Loans and investments by trustees not chargeable as breaches of trust 40. Liability for loss by reason of improper investment 41. Powers supplementary to powers of investment 42. Power to deposit money at bank and to pay calls Protection and Indemnity of Trustees 43. Protection against liability in respect of rents and covenants 44. Protection by means of advertisement 45. Protection in regard to notice 46. Exoneration of trustees in respect of certain powers of attorney 47. Implied indemnity of trustees 48. Application to the Court for advice and directions 49. Form of application Powers of the Court to Make Vesting and other Orders 50. Vesting orders of land 51. Orders as to contingent rights of unborn persons 52. Vesting order in place of conveyance by infant mortgagee 53. Vesting order consequential on order for sale or mortgage of land 54. Vesting order consequential on judgment for specific performance, etc. 55. Effect of vesting orders 56. Power to appoint person to convey 4

5 57. Vesting orders as to stock and things in action 58. Vesting orders of charity property 59. Vesting orders in relation to infant s beneficial interests 60. Orders made upon certain allegations to be conclusive evidence 61. Orders of Court to be registered 62. Registration of vesting order made by court in England 63. Power of Court to authorise dealings with trust property 64. Persons entitled to apply for orders 65. Power to give judgment in absence of a trustee 66. Power to charge costs on trust estate 67. Power to relieve trustee from personal liability 68. Power to make beneficiary indemnify for breach of trust Payment into Court 69. Payment into Court by trustees Charitable Purposes-Vesting 70. Real property transferred for religious, etc., purposes to vest in trustees and their successors 71. Charitable purposes PART V - Variation of Trusts 72. Jurisdiction of Court to vary trusts PART VI - Exempted Trusts 73. Registrar of Trusts to be appointed 74. Registration of exempted trusts 75. Certificate and registration fee 76. Documents to be lodged 77. Accounts, minutes and information 78. Annual fee 79. Failure to comply with section 77 or Liability for false statements 81. Power to give undertaking as to tax liability 82. Submission of trust before execution 83. Exemption from section 74(4) 84. Fees and expenses to be payable out of the trust fund 85. Termination of trust 86. Definitions in this Part 5

6 PART VII - Trusts-Foreign Element 87. Definitions in this Part 88. Application of this Part 89. Governing law 90. Matters determined by governing law 91. Exclusion of foreign law 92. Heirship rights 93. Foreign judgments 94. Application of this Part PART VIII - Special Trusts-Alternative Regime 95. Definitions in this Part 96. Application 97. Ordinary trusts and powers 98. Existing law 99. Objects 100. Enforcers 101. Duties of enforcers 102. Rights and remedies of enforcers 103. Uncertainty 104. Cy-près 105. Trust corporation 106. Theft 107. Unlawful acceptance 108. Foreign element 109. Land in the Islands PART IX- General Provisions 110. Application of Law 111. Indemnity Schedule: Form of appointment of new Trustees 6

7 TRUSTS LAW (2011 Revision) PART I - Introductory 1. This Law may be cited as the. Short title 2. In this Law - Definitions authorised investments means investments authorised by the instrument, if any, creating the trust for the investment of money subject to the trust, or by law; commencement date means the 18th February, 1967; contingent right as applied to land, includes a contingent or executory interest, a possibility coupled with an interest whether the object of the gift or limitation of the interest, or possibility is or is not ascertained, also a right of entry, whether immediate or future, and whether vested or contingent; convey and conveyance as applied to any person include the execution by that person of every necessary or suitable assurance (including an assent) for conveying, assigning, appointing, surrendering, or other transferring or disposing of land whereof he is seised or possessed, or wherein he is entitled to a contingent right, either for his whole estate or for any less estate, together with the performance of all formalities required by law for the validity of the conveyance; Court means the Grand Court of the Cayman Islands; exempted trust means a trust registered as an exempted trust under Part VI; income includes rents and profits; hereditaments mean real property which, under an intestacy, devolves on the next of kin; land includes land of any tenure, houses and other buildings, mines and minerals, and other corporeal hereditaments; also a rent and other incorporeal hereditaments, and an easement, right, privilege or benefit in, over, or derived from land, and also an undivided share in land; mines and minerals, in the definition of land, includes any strata or seam of minerals or substances in or under any land and powers of working and winning the same; mortgage and mortgagee include a charge or chargee by way of mortgage and relate to every estate and interest regarded in equity as merely a security for money, and every person deriving title under the original mortgagee; 7

8 2011 Revision 2009 Revision new trustee includes an additional trustee; pay and payment, as applied in relation to stocks and securities and in connection with the expression into court, include the deposit or transfer of the same in or into court; personal representative means the executor or administrator for the time being of a deceased person; possessed applies to receipt of income of and to any vested estate less than a life interest in possession or in expectancy in any land; possession includes receipt of rents and profits or the right to receive the same, if any; property includes real and personal property, and any estate, share and interest in any property, real or personal, and any debt, thing in action and other right or interest, whether in possession or not; rights include estates and interests; sale includes an exchange; securities include stocks, funds and shares and, so far as relate to payments into court, has the same meaning as in the enactments relating to funds in court; securities payable to bearer include securities transferable by delivery or by delivery and endorsement; stock includes fully paid up shares and, so far as relates to vesting orders made by the Court under this Law, includes any fund, annuity or security transferable in books kept by any company or society, or by instrument of transfer either alone or accompanied by other formalities, and any share or interest therein; transfer, in relation to stock or securities, includes the performance and execution of every deed, power of attorney, act and thing on the part of the transferor to effect and complete the title in the transferee; trust does not include the duties incident to an estate conveyed by way of mortgage, but with this exception the expressions trust and trustee extend to implied and constructive trusts, to cases where the trustee has a beneficial interest in the trust property and to the duties incident to the office of a personal representative; trustee where the context admits, includes a personal representative; trust corporation means a body corporate incorporated under the Companies Law (2011 Revision) with a registered office in the Islands or a body corporate registered as a foreign company under Part IX of the Companies Law (2007 Revision) and in both cases holding a licence to carry on trust business granted under the Banks and Trust Companies Law (2009 Revision); 8

9 trust for sale, in relation to land, means an immediate binding trust for sale, whether or not exercisable at the request or with the consent of any person, and with or without power at discretion to postpone the sale; and trustees for sale mean the persons (including a personal representative) holding land on trust for sale. PART II - Appointment and Discharge of Trustees 3. (1) Where, at the commencement date, there are more than four trustees of a settlement of land, or more than four trustees holding land on trust for sale, no new trustees shall (except where, as a result of the appointment, the number is reduced to four or less) be capable of being appointed until the number is reduced to less than four, and thereafter the number shall not be increased beyond four. (2) In the case of settlements and dispositions on trust for sale of land made or coming into operation after the commencement date- (a) the number of trustees shall not in any case exceed four, and where more than four persons are named as such trustees, the four first named (who are able and willing to act) shall alone be the trustees, and the other persons named shall not be trustees unless appointed on the occurrence of a vacancy; and (b) the number of trustees shall not be increased beyond four. (3) Subsections (1) and (2) apply to settlements and dispositions of land, and the restrictions imposed on the number of trustees do not apply- (a) in the case of land vested in trustees for charitable, ecclesiastical or public purposes; or (b) where the net proceeds of the sale of the land are held for like purposes. 4. (1) Where a trustee, either original or substituted and whether appointed by the Court or otherwise, is dead, remains out of the Islands for more than twelve months, desires to be discharged from all or any of the trusts or powers reposed in or conferred on him, refuses or is unfit to act therein is incapable of acting therein, or is an infant, then, subject to the restrictions imposed by this Law on the number of trustees- (a) the person or persons nominated for the purpose of appointing new trustees by the instrument, if any, creating the trust, or (b) if there is no such person, or no such person able and willing to act, then the surviving or continuing trustee or trustees for the time being, or the personal representatives of the last surviving or continuing trustee, Limitation on the number of trustees Power of appointing new or additional trustees 9

10 may, by deed, appoint one or more other persons (whether or not being the persons exercising the power) to be a trustee or trustees in the place of the trustee so deceased, remaining out of the Islands, desiring to be discharged, refusing or being unfit or being incapable or being an infant, as aforesaid. (2) Where a trustee has been removed under a power contained in the instrument creating the trust, a new trustee or trustees may be appointed in the place of the trustee who is removed, as if he were dead, or, in the case of a corporation, as if the corporation desired to be discharged from the trust, and this section shall apply accordingly, but subject to the restrictions imposed on the number of trustees. (3) Where a corporation, being a trustee, is or has been dissolved, either before or after the commencement date, then, for the purposes of this section, the corporation shall be deemed to be and to have been from the date of the dissolution incapable of acting in the trusts or powers reposed in or conferred on the corporation. (4) The power of appointment given by subsection (1) or any similar previous enactment to the personal representatives of a last surviving or continuing trustee shall be and shall be deemed always to have been exercisable by the executors for the time being (whether original or by representation) of such surviving or continuing trustee, who have proved the will of their testator or by the administrators for the time being of such trustee without the concurrence of any executor who has renounced or has not proved. (5) Where a sole trustee, other than a trust corporation, is or has been originally appointed to act in a trust, or where, in the case of any trust there are not more than three trustees (none of them being a trust corporation) either original or substituted and whether appointed by the Court or otherwise, then- (a) the person or persons nominated for the purpose of appointing new trustees by the instrument, if any, creating the trust; or (b) if there is no such person, or no such person able and willing to act, then the trustee or trustees for the time being, may, by deed, appoint another person or persons to be an additional trustee or trustees, but it shall not be obligatory to appoint any additional trustee, unless the instrument, if any, creating the trust provides to the contrary, nor shall the number of trustees be increased beyond four by virtue of any such appointment. (6) Every new trustee appointed under this section as well before as after all the trust property becomes by law, assurance or otherwise, vested in him, shall have the same powers, authorities and discretions, and may in all respects act as if 10

11 he had been originally appointed a trustee by the instrument, if any, creating the trust. (7) The provisions of this section relating to a trustee who is dead include the case of a person nominated trustee in a will but dying before the testator, and those relative to a continuing trustee include a refusing or retiring trustee, if willing to act in the execution of this section. (8) Where a person of unsound mind, being a trustee, is also entitled in possession to some beneficial interest in the trust property, no appointment of a new trustee in his place shall be made by the continuing trustees or trustee, under this section, unless leave has been given by the Court to make the appointment. 5. (1) Where an infant or a person out of the Islands is absolutely entitled under the will or on the intestacy of a person dying before or after the commencement date (in this subsection called the deceased ) to a devise or legacy, to the residue of the estate of the deceased or any share therein, and such devise, legacy, residue or share is not under the will, if any, of the deceased, devised or bequeathed to trustees for the infant or person out of the Islands, the personal representatives of the deceased may, by writing, appoint a trust corporation of two or more persons not exceeding four (whether or not including the personal representatives or one or more of the personal representatives), to be the trustee or trustees of such devise, legacy, residue or share for the infant or the person out of the Islands and may execute or do any assurance or thing requisite for vesting such devise, legacy, residue or share in the trustee or trustees so appointed. Power to appoint trustees of property belonging to infants or to persons out of the Islands (2) On such appointment under subsection (1), the personal representatives, as such, shall be discharged from all further liability in respect of such devise, legacy, residue or share, and the same may be retained in its existing condition or state of investment, or may be converted into money, and such money may be invested in any investment authorised by this Law. (3) Where a personal representative has, before the commencement date, retained or sold any such devise, legacy, residue or share, and invested the same or the proceeds thereof in any investments in which he was authorised to invest money subject to the trust, then, subject to any order of the Court made before such commencement date, he shall not be deemed to have incurred any liability on that account, or by reason of not having paid or transferred the money or property into Court. 6. On the appointment of a trustee for the whole or any part of trust property- Supplemental provisions as to appointment of (a) the number of trustees may, subject to the restrictions imposed by trustees this Law on the number of trustees, be increased; 11

12 Evidence as to a vacancy in a trust (b) a separate set of trustees, not exceeding four, may be appointed for any part of the trust property held on trusts distinct from those relating to any other part or parts of the trust property, notwithstanding that no new trustees or trustee are or is to be appointed for other parts of the trust property, and any existing trustee may be appointed or remain one of such separate set of trustees or, if only one trustee was originally appointed, then, save as hereinafter provided, one separate trustee may be so appointed; (c) it shall not be obligatory to appoint more than one new trustee where only one trustee was originally appointed, or to fill up the original number of trustees where more than two trustees were originally appointed, but except where only one trustee was originally appointed, or where a contrary intention is expressed in, or evidenced by, the trust instrument, a trustee shall not be discharged from his trust unless there is either a trust corporation or at least two individuals to act as trustees to perform the trust; and (d) any assurance or thing requisite for vesting the trust property, or any part thereof, in a sole trustee, or jointly in the persons who are the trustees, shall be executed or done. 7. (1) A statement, contained in any instrument coming into operation after the commencement date by which a new trustee is appointed for any purpose connected with land, to the effect that a trustee has remained out of the Islands for more than twelve months, refuses, is unfit to act or is incapable of acting, or that he is not entitled to a beneficial interest in the trust property in possession, shall, in favour of a purchaser of a legal estate, be conclusive evidence of the matter stated. (2) In favour of such purchaser any appointment of a new trustee depending on that statement, and any vesting declaration express or implied, consequent on the appointment, shall be valid. Retirement of trustee without new appointment 8. (1) Where a trustee is desirous of being discharged from the trust, and after his discharge there will be either a trust corporation or at least two individuals to act as trustees to perform the trust, then, if such trustee as aforesaid, by deed, declares that he is desirous of being discharged from the trust, and if his co-trustees and such other person, if any, as is empowered to appoint trustees, by deed, consent to the discharge of the trustee, and to the vesting in the co-trustees alone of the trust property, the trustee desirous of being discharged shall be deemed to have retired from the trust, and shall, by the deed, be discharged therefrom under this Law without any new trustee being appointed in his place. 12

13 (2) Any assurance or thing requisite for vesting the trust property in the continuing trustees alone shall be executed or done. 9. (1) Where, by a deed, a new trustee is appointed to perform any trust- (a) if the deed contains a declaration by the appointor to the effect that any estate or interest in any land subject to the trust, or in any chattel so subject, or the right to recover or receive any debt or other thing in action so subject, shall vest in the persons who, by virtue of the deed, become or are the trustees for performing the trust, the deed, shall operate, without any conveyance or assignment, to vest in those persons as joint tenants and for the purposes of the trust the estate, interest or right to which the declaration relates; and (b) if the deed is made after the commencement date and does not contain such a declaration, the deed shall, subject to any express provisions to the contrary therein contained, operate as if it had contained such a declaration by the appointor extending to all the estates, interests and rights with respect to which a declaration could have been made. (2) Where, by a deed, a retiring trustee is discharged under the statutory Vesting of trust property in new or continuing trustees power without a new trustee being appointed - (a) if the deed contains such a declaration as aforesaid by the retiring and continuing trustees, and by the other person, if any, empowered to appoint trustees, the deed shall, without any conveyance or assignment, operate to vest in the continuing trustees alone as joint tenants, and for the purposes of the trust, the estate, interest or right to which the declaration relates; and (b) if the deed is made after the commencement date and does not contain such a declaration, the deed shall, subject to any express provision to the contrary therein contained, operate as if it had contained such a declaration by such persons as aforesaid extending to all the estates, interest and rights with respect to which a declaration could have been made. (3) An express vesting declaration whether made before or after the commencement date shall, notwithstanding that the estate, interest and right to be vested is not expressly referred to, and provided that the other statutory requirements were or are complied with, operate and be deemed always to have operated (but without prejudice to any express provisions to the contrary contained in the deed of appointment or discharge) to vest in the persons referred to in subsections (1) and (2), as the case may require, such estates, interest and rights as are capable of being and ought to be vested in those persons. 13

14 (4) This section does not extend- (a) to land conveyed by way of mortgage for securing money subject to the trust, except land conveyed on trust for securing debentures or debenture stock; (b) to land held under a lease which contains any covenant, condition or agreement against assignment or disposing of the land without licence or consent, unless, prior to the execution of the deed containing expressly or impliedly the vesting declaration, the requisite licence or consent has been obtained, or unless, by virtue of any law, the vesting declaration, express or implied, would not operate as a breach of covenant or give rise to a forfeiture; or (c) to any share, stock, annuity or property which is only transferable in books kept by a company or other body, or in manner directed by or under a law. (5) In subsection (4)- Power of Court to appoint new trustees lease includes an underlease and an agreement for a lease or underlease. 10. (1) The Court may, whenever it is expedient to appoint a new trustee or trustees, and it is found inexpedient, difficult or impracticable so to do without the assistance of the Court, make an order appointing a new trustee or trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. (2) The Court may make an order appointing a new trustee in substitution for a trustee who is convicted of felony, is a person of unsound mind, is a bankrupt or is a corporation which is in liquidation or has been dissolved. (3) An order under this section, and any consequential vesting order or conveyance, shall not operate further or otherwise as a discharge to any former or continuing trustee than an appointment of new trustees under any power for that purpose contained in any instrument would have operated. (4) Nothing in this section gives power to appoint an executor or administrator. Power to authorise remuneration Powers of new trustee appointed by the Court 11. Where the Court appoints a corporation to be a trustee either solely or jointly with another person, the Court may authorise the corporation to charge such remuneration for its services as trustee as the Court may think fit. 12. Every trustee appointed by the Court shall, as well before as after the trust property becomes by law, assurance or otherwise, vested in him, have the same 14

15 powers, authorities and discretions, and may in all respects act as if he had been originally appointed a trustee by the instrument, if any, creating the trust. PART III - Presumption of Lifetime Effect and Reserved Powers 13. (1) In construing the terms of any instrument stipulating the trusts and powers in and over the property, if the instrument is not expressed to be a will, testament or codicil and is not expressed to take effect only upon the death of the settlor, it shall be presumed that all such trusts (and in particular the duty of the trustees to the beneficiaries to administer the trust in accordance with its terms) and powers were intended by the settlor to take immediate effect upon the property being identified and vested in the trustee, save as otherwise expressly, or by necessary implication, provided in the instrument. Presumption of immediate effect (2) Subsection (1) shall apply notwithstanding- (a) that the trust may have been created in order to avoid the application upon the settlor s death of laws relating to wills, probate or succession; (b) that during the lifetime of the settlor, beneficiaries of the trust may not be ascertainable; (c) that beneficial interests may only vest in remainder or may remain contingent or subject to defeasance by the exercise of reserved powers or otherwise; or (d) that the settlor may be one of the trustees. (3) Subsection (1) does not apply in the case of a declaration by a person constituting himself the sole trustee of a property to which he was beneficially entitled. 14. (1) The reservation or grant by a settlor of a trust of- Reserved powers (a) any power to revoke, vary or amend the trust instrument or any trusts or powers arising thereunder in whole or in part; (b) a general or special power to appoint either income or capital of the trust property; (c) any limited beneficial interest in the trust property; (d) a power to act as a director or officer of any company wholly or partly owned by the trust; (e) a power to give binding directions to the trustee in connection with the purchase, holding or sale of the trust property; (f) a power to appoint, add or remove any trustee, protector or beneficiary; (g) a power to change the governing law and the forum for administration of the trust; or 15

16 (h) a power to restrict the exercise of any powers or discretions of the trustee by requiring that they shall only be exercisable with the consent of the settlor or any other person specified in the trust instrument, shall not invalidate the trust or affect the presumption under section 13(1). (2) In this Part- Indemnity of trustees settlor has the meaning ascribed to that term in section A trustee who has acted in compliance with, or as a result of an otherwise valid exercise of, any of the powers referred to in section 14(1) shall not be acting in breach of trust. PART IV - Administration of Trusts General Powers of Trustees Power of trustees for sale to sell by auction or private contract 16. (1) Where a trust for sale or a power of sale of property is vested in a trustee, he may sell or concur with any other person in selling all or any part of the property, either subject to prior charges or not, and either together or in lots, by public auction or by private contract, subject to any such conditions respecting title or evidence of title or other matter as the trustee thinks fit, with power to vary any contract for sale, and to buy in at any auction, or to rescind any contract for sale and to re-sell, without being answerable for any loss. (2) A trust or power to sell or dispose of land includes a trust or power to sell or dispose of part thereof, whether the division is horizontal, vertical or made in any other way. Power to postpone sale 17. (1) A power to postpone sale shall, in the case of every trust for sale of land, be implied unless a contrary intention appears. (2) Where there is a power to postpone the sale then (subject to any express direction to the contrary in the instrument, if any, creating the trust for sale) the trustees for sale shall not be liable in any way for postponing the sale, in the exercise of their discretion, for any indefinite period; nor shall a purchaser of a legal estate be concerned in any case with any directions respecting the postponement of a sale. (3) Subsections (1) and (2) apply whether the trust for sale is created before, on or after the commencement date. 16

17 (4) Where a disposition or settlement coming into operation after the commencement date contains a trust either to retain or sell land the same shall be construed as a trust to sell the land with power to postpone the sale. 18. (1) Where any property, vested in trustees by way of security, becomes, by virtue of the statutes of limitation, an order for foreclosure or otherwise, discharged from the right of redemption, it shall be held by them on trust for sale. Trust for sale of mortgaged property where right of redemption is barred (2) The net proceeds of sale, after payment of costs and expenses, shall be applied in like manner as the mortgage debt, if received, would have been applicable, and the income of the property until sale shall be applied in like manner as the interest, if received, would have been applicable; but this subsection operates without prejudice to any rule of law relating to the apportionment of capital and income between tenant for life and remainder-man. (3) This section does not affect the right of any person to require that, instead of a sale, the property shall be conveyed to him or in accordance with his directions. 19. (1) No sale made by a trustee shall be impeached by any beneficiary upon the ground that any of the conditions subject to which the sale was made may have been unnecessarily depreciatory, unless it also appears that the consideration for the sale was thereby rendered inadequate. Power to sell subject to depreciatory conditions (2) No sale made by a trustee shall, after the execution of the conveyance, be impeached as against the purchaser upon the ground that any of the conditions subject to which the sale was made may have been unnecessarily depreciatory, unless it appears that the purchaser was acting in collusion with the trustee at the time when the contract for sale was made. (3) No purchaser, upon any sale made by a trustee, shall be at liberty to make any objection against the title upon any of the grounds aforesaid. (4) This section applies to sales made before or after the commencement date. 20. (1) The receipt in writing of a trustee for any money, securities or other personal property or effects payable, transferable or deliverable to him under any trust or power shall be a sufficient discharge to the person paying, transferring or delivering the same and shall effectually exonerate him from seeing to the application or being answerable for any loss or misapplication thereof. Power of trustees to give receipts (2) This section applies notwithstanding anything to the contrary in the instrument, if any, creating the trust. 17

18 Power to compound liabilities Power to raise money by sale, mortgage or otherwise 21. A personal representative, or two or more trustees acting together, may- (a) accept any property, real or personal, before the time at which it is made transferable or payable; (b) sever and apportion any blended trust funds or property; (c) pay or allow any debt or claim on any evidence that he or they think sufficient; (d) accept any composition or any security, real or personal, for any debt or for any property, real or personal, claimed; (e) allow any time of payment of any debt; or (f) compromise, compound, abandon, submit to arbitration or otherwise settle any debt, account, claim or thing whatever relating to the testator s or intestate s estate or to the trust, and for any of those purposes may enter into, give, execute and do such agreements, instruments of composition or arrangement, releases and other things as to him or them seem expedient, without being responsible for any loss occasioned by any act or thing so done by him or them in good faith. 22. (1) Where trustees are authorised by the instrument, if any, creating the trust or by law to pay or apply capital money subject to the trust for any purpose or in any manner, they shall have and shall be deemed always to have had power to raise the money required by sale, conversion, calling in or mortgage of all or any part of the trust property for the time being in possession. (2) Subsection (1) applies notwithstanding anything to the contrary contained in the instrument, if any, creating the trust. Protection to purchasers and mortgagees dealing with trustees Devolution of power of trustees 23. No purchaser or mortgagee, paying or advancing money on a sale or mortgage purporting to be made under any trust or power vested in trustees shall be concerned to see that such money is wanted, or that no more than is wanted is raised, or otherwise as to the application thereof. 24. (1) Where a power or trust is given to or imposed on two or more trustees jointly, the same may be exercised or performed by the survivor or survivors of them for the time being. (2) Until the appointment of new trustees, the personal representatives or representative for the time being of a sole trustee, or, where there were two or more trustees, of the last surviving or continuing trustee, shall be capable of exercising or performing any power or trust which was given to or capable of being exercised by, the sole or last surviving or continuing trustee, or other the trustees or trustee for the time being of the trust. (3) In subsection (2)- 18

19 personal representative does not include an executor who has renounced or has not proved. 25. (1) A trustee may insure, against loss or damage by fire, any building or other insurable property to any amount, including the amount of any insurance already on foot, not exceeding the value of the building or property, and pay the premiums for such insurance out of the income thereof or out of the income of any other property subject to the same trusts without obtaining the consent of any person who may be entitled wholly or partly to such income. Power to insure (2) Subsection (1) does not apply to any building or property which a trustee is bound forthwith to convey absolutely to any beneficiary upon being requested to do so. 26. (1) Money receivable by trustees or any beneficiary under a policy of insurance against the loss or damage of any property subject to a trust or to a settlement, whether by fire or otherwise, shall, where the policy has been kept up under any trust in that behalf or under any power, statutory or otherwise, or in performance of any covenant or of any obligation, statutory or otherwise, or by a tenant for life impeachable for waste, be capital money for the purposes of the trust or settlement, as the case may be. Application of insurance money where policy kept up under any trust, power or obligation (2) If any such money is receivable by any person, other than the trustees of the trust or settlement, that person shall use his best endeavours to recover and receive the money, and shall pay the net residue thereof, after discharging any costs of recovering and receiving it, to the trustees of the trust or settlement, or, if there are no trustees capable of giving a discharge therefor, into Court. (3) Any such money- (a) if it was receivable in respect of property held upon trust for sale, shall be held upon the trusts and subject to the powers and provisions applicable to money arising by a sale under such trust; or (b) in any other case, shall be held upon trusts corresponding as nearly as may be with the trusts affecting the property in respect of which it was payable. (4) Such money, or any part thereof, may also be applied by the trustees, or, if in court, under the direction of the Court, in rebuilding, reinstating, replacing or repairing the property lost or damaged, but any such application by the trustees shall be subject to the consent of any person whose consent is required by the instrument, if any, creating the trust to the investment of money subject to the trust. 19

20 (5) Nothing contained in this section shall prejudice or affect the right of any person to require any such money or any part thereof to be applied in rebuilding, reinstating or repairing the property lost or damaged, or the rights of any mortgagee, lessor or lessee, whether under any law or otherwise. (6) This section applies to policies effected either before, on or after the commencement date, but only to money received after such date. Deposit of documents for safe custody Accounts and records 27. Trustees may deposit any documents held by them relating to the trust, or to trust property, with any banker, banking company or other company whose business includes the undertaking of the safe custody of documents, and any sum payable in respect of such deposit shall be paid out of the income of the trust property. 27A. (1) A trustee shall keep or cause to be kept accurate accounts and records (including underlying documentation) of the trustee s trusteeship appropriate to the trust and trust property. (2) All accounts and records required to be kept under subsection (1) shall be retained for a minimum period of five years from the date on which they are prepared. (3) A trustee who knowingly and wilfully contravenes subsection (1) or (2) shall be subject to a penalty of five thousand dollars. Reversionary interests, valuations and audit 28. (1) Where trust property includes any share or interest in property not vested in the trustees, the proceeds of the sale of any such property or any other thing in action, the trustees on the same falling into possession or becoming payable or transferable may- (a) agree or ascertain the amount or value thereof or any part thereof in such manner as they may think fit; (b) accept in or towards satisfaction thereof, at the market or current value, or upon any valuation or estimate of value which they may think fit, any authorised investments; (c) allow any deductions for duties, costs, charges and expenses which they think proper or reasonable; and (d) execute any release in respect of the premises so as effectually to discharge all accountable parties from all liability in respect of any matters coming within the scope of such release, without being responsible in any such case for any loss occasioned by any act or thing so done by them in good faith. 20

21 (2) The trustees shall not be under any obligation and shall not be chargeable with any breach of trust by reason of any omission- (a) to place any distringas notice or apply for any stop or other like order upon any securities or other property out of or in which such share, interest or other thing in action as aforesaid is derived, payable or charged; or (b) to take any proceedings on account of any act, default or neglect on the part of the persons in whom such securities or other property or any of them or any part thereof are for the time being, or had at any time been, vested, unless and until required in writing so to do by some person, or the guardian of some person, beneficially interested under the trust, and unless also due provision is made to their satisfaction for payment of the costs of any proceedings required to be taken: Provided that nothing in this subsection shall relieve the trustees of the obligation to get in and obtain payment or transfer of such share, interest or other thing in action on the same falling into possession. (3) Trustees may, for the purpose of giving effect to the trust, or any of the provisions of the instrument, if any, creating the trust or of any law, from time to time (by duly qualified agents), ascertain and fix the value of any trust property in such manner as they think proper, and any valuation so made in good faith shall be binding upon all persons interested under the trust. (4) Trustees may, in their absolute discretion, from time to time, but not more than once in every three years unless the nature of the trust or any special dealings with the trust property make a more frequent exercise of the right reasonable, cause the accounts of the trust property to be examined or audited by an independent accountant and shall, for that purpose, produce such vouchers and give such information to him as he may require; and the costs of such examination or audit including the fee of the auditor, shall be paid out of the capital or income of the trust property, or partly in one way and partly in the other, as the trustees, in their absolute discretion, think fit, but, in default of any direction by the trustees to the contrary in any special case, costs attributable to capital shall be borne by capital and those attributable to income by income. 29. (1) Trustees or personal representatives may, instead of acting personally, employ and pay an agent, whether attorney-at-law, banker, stockbroker or other person to transact any business or do any act required to be transacted or done in the execution of the trust, or the administration of the testator s or intestate s estate, including the receipt and payment of money, and shall be entitled to be Power to employ agents 21

22 allowed and paid all charges and expenses so incurred, and shall not be responsible for the default of any such agent if employed in good faith. (2) Trustees or personal representatives may appoint any person to act as their agent or attorney for the purpose of selling, converting, collecting, getting in and executing and perfecting assurances of, or managing, cultivating or otherwise administering, any property subject to the trust or forming part of the testator s or intestate s estate in any place outside the Islands, or executing or exercising any discretion or trust or power vested in them in relation to any such property, with such ancillary powers, and with and subject to such provisions and restrictions as they may think fit, including a power to appoint substitutes, and shall not, by reason only of their having made such appointment, be responsible for any loss arising thereby. (3) Without prejudice to such general power of appointing agents, a trustee- (a) may appoint an attorney-at-law to be his agent to receive and give a discharge for any money or valuable consideration or property receivable by the trustee under the trust, by permitting the attorney-at-law to have the custody of, and to produce, a deed having in the body thereof or endorsed thereon a receipt for such money or valuable consideration or property, the deed being executed, or the endorsed receipt being signed, by the person entitled to give a receipt for that consideration; (b) shall not be chargeable with breach of trust by reason only of his having made or concurred in making any such appointment; and the production of any such deed by the attorney-at-law shall have the same statutory validity and effect as if the person appointing the attorney-at-law had not been a trustee; and (c) may appoint a banker or attorney-at-law to be his agent to receive and give a discharge for any money payable to the trustee under or by virtue of a policy of insurance, by permitting the banker or attorney-at-law to have the custody of and to produce the policy of insurance with a receipt signed by the trustee, and a trustee shall not be chargeable with a breach of trust by reason only of his having made or concurred in making such appointment: Provided that nothing in this subsection shall exempt a trustee from any liability which he would have incurred if this Law had not been passed, in case he permits any such money, valuable consideration or property to remain in the hands or under the control of the banker or attorney-at-law for a period longer than is reasonably necessary to enable the banker or attorney-at-law, as the case may be, to pay or transfer the same to the trustee. 22

23 (4) Subsection (3) applies whether the money or valuable consideration or property was or is received before or after the commencement date. 30. Where an undivided share in the proceeds of sale of land directed to be sold, or in any other property, is subject to a trust, or forms part of the estate of a testator or intestate, the trustees or personal representative may (without prejudice to the trust for sale affecting the entirety of the land and the powers of the trustees for sale in reference thereto) execute or exercise any trust or power vested in them in relation to such share in conjunction with the persons entitled to or having power in that behalf over the other share or shares, and notwithstanding that any one or more of the trustees or personal representatives may be entitled to or interested in any such other share, either in his or their own right or in a fiduciary capacity. 31. Where an executor or administrator has given such or the like notices as, in the opinion of the court in which such executor or administrator is sought to be charged, would have been given by the Court in an administration suit, for creditors and others to send in to the executor or administrator their claims against the estate of the testator or intestate, such executor or administrator shall, at the expiration of the time limited in the said notices or the last of the said notices for sending in such claims, be at liberty to distribute the assets of the testator or intestate, or any part thereof, amongst the parties entitled thereto, having regard to the claims of which such executor or administrator has then notice, and shall not be liable for the assets or any part thereof so distributed to any person of whose claim such executor or administrator has not had notice at the time of the distribution of the said assets or part thereof as the case may be; but nothing herein contained shall prejudice the right of any creditor or claimant to follow the assets or any part thereof into the hands of the person or persons who may have received the same respectively. Power to concur with others Distribution of assets after notice by executor or administrator Powers of Maintenance and Advancement, and Protective Trusts 32. (1) Where any property is held by trustees in trust for any person for any interest whatsoever, whether vested or contingent, then, subject to any prior interests or charges affecting that property- (a) during the infancy of any such person, if his interest so long continues, the trustees may, at their sole discretion, pay to his parent or guardian, if any, or otherwise apply for or towards his maintenance, education or benefit, the whole or such part, if any, of the income of that property as may, in all the circumstances, be reasonable, whether or not there is- (i) any other fund applicable to the same purpose; or Power to apply income for maintenance and to accumulate surplus income during a minority 23

24 (ii) any person bound by law to provide for his maintenance or education; and (b) if such person on attaining the age of eighteen years has not a vested interest in such income, the trustees shall henceforth pay the income of that property and of any accretion thereto under subsection (2) to him, until he either attains a vested interest therein or dies, or until failure of his interest: Provided that in deciding whether the whole or any part of the income of the property is, during a minority, to be paid or applied for the purposes aforesaid, the trustees shall have regard to the age of the infant and his requirements and generally to the circumstances of the case, and in particular to what other income, if any, is applicable for the same purposes; and where trustees have notice that the income of more than one fund is applicable for this purpose, then so far as practicable, unless the entire income of the funds is paid or applied as aforesaid or the Court otherwise directs, a proportionate part only of the income of each fund shall be so paid or applied. (2) During the infancy of any such person, if his interest so long continues, the trustees shall accumulate all the residue of that income in the way of compound interest by investing the same and the resulting income thereof from time to time in authorised investments, and shall hold those accumulations- (a) if any such person- (i) attains the age of eighteen years or marries under that age, and his interest in such income during his infancy or until his marriage is a vested interest, or (ii) on attaining the age of eighteen years or on marriage under that age, becomes entitled to the property from which such income arose in fee simple, absolute or determinable, or absolutely, or for an entailed interest, in trust for such person absolutely, and so that the receipt of such person after marriage, and though still an infant, shall be a good discharge; and (b) in any other case, notwithstanding that such person had a vested interest in such income, as an accretion to the capital of the property from which such accumulations arose, and as one fund with such capital for all purposes, and so that, if such property is settled land, such accumulations shall be held upon the same trusts as if the same were capital money arising therefrom, but the trustees may, at any time during the infancy of such person, if his interest so long continues, apply those accumulations, or any part thereof, as if they were income arising in the then current year. 24